Oil trader’s work during ‘02 strike pays off handsomely

CARACAS, Venezuela

Arturo Sarmiento, 35, rides in a chauffeured BMW, recently bought a television station and has profited handsomely by trading Venezuelan oil.

He concedes that one factor behind his success was a decision to keep doing business as an oil trader with President Hugo Chavez’s government during a strike that nearly paralyzed the state oil company four years ago.

Mr. Sarmiento says he was a strike buster out of principle, thinking it was a criminal attempt at regime change — and his decision has brought dividends.

“Other people were striking, and I was working,” said Mr. Sarmiento, adding that for a time “you’d become almost a social pariah if you dared work with the Chavez government.”

But nowadays, Mr. Sarmiento and many other entrepreneurs are making deals and prospering, even as Mr. Chavez says he is leading Venezuela toward socialism and away from capitalism. A new well-connected business class, ranging from shipping executives to bond traders, has seen opportunities in a shifting political landscape and is flourishing.

“I think when you get societal changes, then spaces become open for new emerging actors,” said Mr. Sarmiento, who has been trading in oil since 1999. “Venezuela has always been fluid. Right now it’s going through a major flux.”

Some anti-Chavez businesspeople have called Mr. Sarmiento a sellout and an opportunist. But even some wealthy opponents of the president seem to be putting their economic interests before politics.

An infusion of petrodollars into the economy has fed a boom in sales of items, including cars and cell phones, while banks enjoy unprecedented profits and demand for government bonds issued this month outstrips supply by 9 to 1. Economic growth is expected to reach 9 percent this year.

Mr. Chavez, who leads in the polls before the Dec. 3 elections, has sporadic meetings with top business leaders. He assures them he is no enemy of the private sector.

“Business is being done. If there are some who refuse to do it, well, they’re losing opportunities,” said Miguel Angel Perez Abad, who heads the pro-Chavez business group Fedeindustria.

Mr. Perez Abad, who distributes propane bought from the state oil company, said he knows many Chavez opponents who are quietly doing business with the government, which is flush with oil profits and a dominant force in the growing economy.

A watershed conflict between business owners and Mr. Chavez came in a two-month strike called by the opposition in late 2002. It began in the oil industry as an effort to oust Mr. Chavez and soon spread, causing shortages of products, including milk and cooking oil.

Mr. Sarmiento helped import gasoline into Venezuela during the strike, and continued doing business with the state oil company Petroleos de Venezuela SA after the protest ended. Mr. Chavez crushed the protest in early 2003 by firing nearly half the oil workers and managers.

Like most successful entrepreneurs, Mr. Sarmiento has been at the right place at the right time. Before he began buying and selling oil, he did a brisk business importing Scotch whisky, a natural market because Venezuelans are among its top consumers.

Mr. Sarmiento was sent by his family to boarding school in Britain when he was 11. His father, a former army officer who was head of the civilian guard during President Carlos Andres Perez’s time, wanted his son to have the best education available.

Among the Venezuelan well-to-do, though, Mr. Sarmiento was ostracized by some for daring to work with the government during the strike. “Even friendships — it brought them to an end because I was an enemy to their political cause,” he recalled.

Many wealthy entrepreneurs remain among Mr. Chavez’s most vehement opponents.

The top presidential challenger in next month’s election, politician Manuel Rosales, argues that Mr. Chavez is hurting the economy in the long run, and promises a business-friendly approach to attract investment.

Mr. Sarmiento insists he keeps out of politics, though he builds close links to the government while representing large oil corporations. He has met Mr. Chavez during talks on key projects. “He’s an impressive gentleman, and I think he has got good intentions,” the oil trader said.

Mr. Sarmiento thinks popular support for Mr. Chavez stems from his efforts to help the poor, and he says Mr. Chavez’s plans for “21st-century socialism” — an evolving philosophy promising a more egalitarian society — should have positive effects.

Others say Mr. Chavez poses a serious threat to the private sector. Flavio Fridegotto, a leader of the Fedecamaras business federation, said the government is “strangling business” with new regulations and political uncertainty. “Who’s going to invest when there’s a threat of communism?” said Mr. Fridegotto, adding that many expect Mr. Chavez to grow more radical if he wins another term.